Crude Oil
Oil fell more than 2% on Wednesday, reversing early gains after a report showed gasoline demand fell in the United States in the latest week.
Brent crude fell $ 1.15 to settle at $44.43 a barrel, while WTI fell $ 1.25 to $41.51 per barrel.
Other data also fed fears that economic recovery from the coronavirus pandemic was lagging. U.S. private employers hired fewer workers than expected for a second straight month in August, suggesting the labor market recovery was slowing.
US Gulf of Mexico offshore oil output on Wednesday was down by 368 KB/D, or 19.9% of the region’s daily production, the US Department of Interior reported, as energy companies restarted more activity in the aftermath of Hurricane Laura.
Nigeria’s NNPC on Wednesday issued a tender for its annual crude oil contracts..
Iraq said on Wednesday it remained fully committed to the OPEC+ oil supply cut agreement, denying earlier media report that it was seeking an exemption from the reduction pact during Q1’21, Iraq’s oil ministry spokesman said.
DOE data
Crude inventories fell by 9.4 million barrels in the last week to 498.4 million barrels. The data reflects a period during which Hurricane Laura shut output and refining facilities. Gasoline demand in the week dropped to 8.78 million barrels per day from 9.16 million bpd a week earlier. This drop should have triggered a build in gasoline stocks going by our material balance statement rather than the draw reported.
The crude draw appears to have been exaggerated while the distillate draw seems to be understated.
covid 19
At a global level, the death toll from the COVID-19 virus rose to 866,614 (+6,316 DoD) yesterday. The total number of active cases rose by 27,000 to 6,868,054. (Click here for details).
Naphtha
Asia’s naphtha crack gained 8% to hit a five-week high of $77.38 a tonne on Wednesday on firm demand.
Naphtha demand has been firm recently with buyers snapping up cargoes through 12-month contracts and spot tenders.
In Japan, the country’s average refinery run rates at 66.7% in the week to Aug. 29 were down from the 70.5% recorded in the previous week. Japan’s naphtha inventories fell in the week to Aug. 29.
Fujairah Oil Industry Zone on Wednesday published data, via industry information service S&P Global Platts, showed that light distillates inventories at about 7.6 million barrels were at their highest in about two months in the week ended Aug. 31.
The September crack is higher at $1.20 /bbl. The October crack is at $ 0.75 / bbl
Gasoline
Asia’s gasoline margins rose 28 cents to reach a two-session high of $1.40 a barrel on tighter supplies.
Gasoline demand has been volatile as personal mobility was affected by the pandemic. Gasoline supplies however have tightened due to lower refinery runs especially in the United States where plants in the Gulf coast had shut to avoid being ravaged by hurricane.
The September crack is higher at $2.55 / bbl. The October crack is at $ 2.60 / bbl
Click Here for a graphical depiction of Global Gasoline stocks by region.
Distillates
Cash discounts for jet fuel widened by 2 cents to $1.22 a barrel to Singapore quotes, a level not seen since May 26.
Middle-distillate inventories in the Fujairah Oil Industry Zone rose 2.5% to 4.2 million barrels in the week ended Aug. 31, data via S&P Global Platts showed. The weekly stocks in Fujairah have averaged 3.9 million barrels so far in 2020, compared with a weekly average of 2.4 million barrels in 2019..
The September crack for 500 ppm Gasoil is lower at $2.90 /bbl with the 10 ppm crack at $ 3.40 / bbl. The regrade is at -$ 5.45 /bbl.
The October crack for 500 ppm Gasoil is at $3.25 /bbl with the 10 ppm crack at $ 3.75 / bbl. The regrade is at -$ 5.00 /bbl.
Click Here for a graphical depiction of Global Distillate stocks by region.
Fuel Oil
Asia’s 180-cst HSFO cash premiums rose to a near two-week high on Wednesday, lifted higher by a stronger deal value in the Singapore trading window.
Meanwhile, fuel oil inventories on the Fujairah bunkering and storage hub fell 14% to a four-month low in the week to Aug. 31. Fujairah Oil Industry Zone inventories for heavy distillates and residues dropped by 2.168 million barrels from the previous week to 13.4318 million barrels, data via S&P Global Platts showed. The inventories were also 12% higher than year-ago levels.
The September crack for 180 cst FO is higher at – $1.65 /bbl with the visco spread at $0.80 /bbl.
The October crack for 180 cst FO is at – $2.25 /bbl with the visco spread at $0.80 /bbl.
Click Here for a graphical depiction of Fuel Oil stocks by region.
Hedge Recommendations
No fresh activity today.
Hedge recommendations are essentially made for refiners. These are not trading positions as such. The rationale of these positions is to lock in extraordinary levels for the refinery.
Click Here to see how all our recommendations have fared
About this blog
This blog post attempts to give a top level summary of the Singapore market goings on to a person who seeks to obtain a directional sense of the market on a daily basis.